Have you heard the news? The Reserve Bank has reduced the Official Cash Rate (OCR) by 0.25%, bringing it down to 3.5% – the lowest level since October 2022!
Whilst this was widely expected by economists, it also shows that the Reserve Bank is keeping a close eye on the global picture. With rising tensions in international trade, there is concern that Trump’s tariffs crusade could increase global prices.
If he does follow through with this policy, we might see more cuts to come. The Reserve Bank is acting early to help support New Zealand’s economy and keep inflation within its 1-3% target range – a good sign for future interest rates.
So what does this mean for you?
- Floating and Revolving Credit Rates: Banks have already responded by dropping floating rates, so you might see a drop in your repayments if you’re on one of these options.
- Fixed Rates: These might not change immediately. Fixed rates are influenced by the global bond market rather than the OCR itself, but this drop could still influence lower fixed rates in the future.
- Loan Accessibility: We’ve seen a drop in some servicing rates (the rate used by banks to assess whether you can afford a loan. This makes it easier for some borrowers to qualify for new lending
- Opportunities: Lower interest rates means more money in your pocket – especially if your loan is structured to take advantage of the change or the ability to pay your loan back quicker.
The best way to take advantage of the OCR change is with tailored and smart loan structuring. Because it’s not just about getting a lower rate – it’s about making sure your lending is working for your goals and your lifestyle.
If you’re unsure your current set up is still the right fit, or you’d just like to explore options – Get In Touch! We’re here to help!
